If you are a fan of Amazon, you likely know that one of the keys to their success is their highly efficient supply chain. Amazon is a master of supply chain management. Through exceptional supply chain management, they have been able to reduce costs and get products to their customers faster than ever.
One way Amazon has managed to beat out the competition again and again is by delivering products to customers so quickly that their competitors just can’t keep up. Amazon has effectively revolutionized logistics and here’s how they did it.
In 2012, Amazon acquired Kiva Systems, a provider of robotic warehouse solutions. Amazon rebranded Kiva to Amazon Robotics and has continued manufacturing warehouse robots for use in their warehouses. As of January 2017, Amazon had 45,000 warehouse robots at work in their warehouses. The robots are currently used to bring goods to people for picking orders but there are plans to make robots that can pick their own orders, reducing the need for human pickers.
Amazon is developing a drone-based delivery system, indicating that Amazon is willing to do whatever it can to take advantage of trending manufacturing strategies in order to have the best supply chain in the market. As part of a publicity stunt in 2013, Jeff Bezos, Amazon’s CEO announced that drones would deliver items under five pounds to locations within ten miles of Amazon’s distribution centers within 30 minutes. In November 2017, Amazon confirmed they are building a drone-based delivery system with objectives similar to what they announced in 2013.
One of the many things customers love about Amazon are the multiple delivery options available. Common delivery options include Prime customers, one-day, first class, and free super saver. Amazon continues to make fast delivery a priority and this is a main reason for their success.
Part of Amazon’s success with its logistics is due to its strategic placement of its own warehouses. They are moving closer and closer to major urban areas so they can meet increasingly fast delivery promises. The warehouses are also grouped into five classes to make meeting product demand easier. Classes include library prime for books and magazines, pallet prime for full-case high demand products, case flow prime for less-than-case high demand products, reverse storage for irregularly shaped and low demand products, and random storage for moderate demand smaller items.
Amazon relies heavily on outsourcing its inventory management, especially for products not purchased regularly. Almost 82% of Amazon’s sales are from third-party sellers. Although inventory management is outsourced, Amazon relies too heavily on its logistics to rely on third-party delivery methods so they use their own delivery vehicles for their same-day or one-hour delivery options.
If you’d like to take a page out of Amazon’s book and try outsourcing a step in your supply chain, Pivot International can help. Our global supply chain management services can help manage your supply global chain providing resource planning, purchasing services, Quality audits, source inspections and overall management of global suppliers to help you manage your supply chain operations as efficiently as possible. To learn more about how we can help you manage an efficient supply chain, contact us today.